Reprinted with permission from Accounting Today
If you’ve been perfecting your niche development, congratulate yourself, but don’t stop there. Kick things up another notch by considering “boutiquing”. A boutique is a specialty provider that offers a single category of services. It enjoys particular market appeal, including a marquee name, perception of quality and customized service.
As the Big Four concentrate energies and resources on Sarbanes-Oxley compliance, regional and local firms are finding there’s plenty of value and profit in honing their offerings in this way.
From Here to There
A niche is the result of a decision to concentrate in a particular market area, across either service lines or industries. Examples are: the construction industry, government audits, IT consulting or estate planning. The niche has the best opportunity of becoming a boutique offering when it is supported by:
- a leader dedicated to developing it, managing it and devising ways to keep the offerings fresh
- assigned revenue goals for the leader and team members
- a compensation plan with incentives tied to performance
- articulated market positioning and uniqueness
- solid practice growth strategies and tactics, including a potent lead generation approach
- a means of measuring progress, and
- depending on the environment, a separate corporate structure.
Downs Is Up
There have been a few pioneers in the burgeoning boutique business. Most recently is Pittsburgh’s Schneider Downs, which has taking “boutiquing” to a whole new level. The firm’s recent reorganization resulted in a collection of five LLCs under one corporate umbrella. They offer: accounting and tax; wealth management; corporate finance; technology advising; and a service suite which includes valuation, litigation support, planning and professional staffing.
The firm’s leaders anticipate the new structure will yield double-digit growth. The plan also includes branding at the boutique level, making it easier for clients to see and understand the value of boutique services offered. Holding company CEO Raymond Buehler Jr. told the Pittsburgh Business Journal, “Externally, as we brought more product and diversification to the practice, sometimes people would only work with us in one of the units and think that’s all we do.” Boutique level branding gives greater clarity to their repertoire of services.
According to Buehler, making the leap from niche to boutique can also:
- Expand leadership development opportunities, by closely tying results and compensation.
- Extend your reach by bringing in non-CPAs as boutique leaders. This breaks down the artificial impediment that only CPAs can become partners, significant in light of the current CPA shortage.
- Introduce fresh new perspectives.
- Gain visibility for your firm as an innovator/thought leader.
Creating a boutique firm requires a series of steps to formalize and energize your niches. One of the most important is revenue segmentation. Envision an Excel spread sheet. Revenue segmentation involves slicing your revenue by rows and columns – horizontally by service lines, in order to know what services make up what part of the total, and vertically by industry, to determine what each industry contributes.
Next, assign a leader’s name to each “chunk” of revenue. In this way you create a team of boutique leaders with ownership and accountability for each revenue segment. They assume responsibility for more than their individual book of business, assuming a solid stake in the firm’s overall success. As well, the process helps drive decisions such as resource allocation. By “slicing and dicing” your revenue, you can observe patterns, needs and opportunities. You’ll also observe more teamwork, as segment leaders become increasingly aware of the interrelationships between revenue segments. Motivating and focusing your team around revenue segments is the foundational step to assigning responsibility, evolving teamwork, and driving revenue.
A mature marketplace with robust competition makes this an ideal time for boutique-building. Sarbanes-Oxley has created a new emphasis on what firms can and cannot do in a multi-provider market, a natural platform from which to consider this approach. Remember, slice and dice!